The FSCS is the UK’s independent compensation fund which gives the level of protection if anything happens to the bank, building society or credit union where funds are deposited. The deposit protection limit is set by European directive for schemes across the European economic area including the UK. The current UK limit of £85,000 was set in 2010 which was equivalent to €100,000 at that time. As exchange rates have changed since then the Prudential Regulation Authority was required to recalculate the UK’s equivalent limit based on the exchange rate on 3 July 2015. From 1 January 2016 the level of protection has reduced from £85,000 to £75,000. If therefore you have eligible deposits of more than £75,000 you are unlikely to be fully protected after 1 January 2016 so you may wish to take action to remain fully covered by the compensation scheme.
In some cases an eligible deposit which is categorised as a temporary high balance (for example as a result of a house sale, an inheritance payment or an insurance payment) may be protected to a higher limit for 6 months after the amount has been credited to the account or from the moment when such eligible deposits become legally transferrable. This additional protection applies from 3 January 2016. Full details can be found on the FSCS website. Finally some accounts such as fixed term deposits and other fixed term products have withdrawal restrictions which could disallow withdrawals. If the balance in these accounts exceed £75,000 after 1 January 2016 it would be wise to approach your bank to see what options they can provide.